In October 2018, the Center for Disease Control and the Food and Drug Administration announced an outbreak of E. coli traced to the consumption of romaine lettuce. The outbreak continued through December. In total, the Center for Disease Control has traced fifty two cases to the produce across fifteen states, leading to nineteen people being hospitalized.
Risk transfers are a vital aspect of any comprehensive risk management plan. Theoretically, those in the best position to avoid a risk should always bear responsibility for the risk. The real world does not work that way, unfortunately. Oftentimes, larger companies and larger contractors use risk transfers to try and push liability “downhill” – onto the backs of smaller companies with less negotiating leverage.
Food safety issues remain a major risk for shippers, carriers, and receivers involved in the transportation of food within the United States. The Food and Drug Administration, acting under the Food Safety Modernization Act, has passed a number of regulations aimed at reimagining the ways companies respond to the threat of food-borne illness or adulteration. The government is trying to move towards a more preventive approach towards food safety, as opposed to a reactive one in which it merely responds and investigates concerns in the wake of outbreaks.
Botulism is better known these days for its use in plastic surgery, pain management, and migraine treatment than it is for its status as a food contaminant. Cases of foodborne botulism infections, however, have risen significantly in the past few years. The Center for Disease Control confirmed this fact recently when it released its annual report on botulism statistics for 2015. (Released in April 2017)
Whole Foods decided in January 2017 to shut down three East Coast ready to eat food manufacturing plants in the wake of Food and Drug Administration warnings about unsanitary kitchens and the finding of listeria bacteria inside one of the plants in February 2016. The shutdown results from one more event in an increasingly long line of recent agency actions that respond aggressively to outbreaks of foodborne illnesses. The Food and Drug Administration has shown itself willing to issue large fines, shut down unsanitary facilities, and even bring criminal charges against food producers who fail to take food safety seriously.
More than a year ago now, the Food and Drug Administration released its final rule on Produce Safety (formally known as “Standards for the Growing, Harvesting, Packing and Holding of Produce for Human Consumption”). The rule resulted from Congress’ passage of the Food Safety Modernization Act (FSMA) at the end of 2010 and constituted part of a major push to upgrade food safety procedures in the United States. However, a new report from the Government Accountability Office (GAO) calls into question the efficiency and efficacy of the FDA’s attempts to regulate this area.
Indemnification clauses in commercial contracts can present a number of potential issues. When the parties to the contract do not properly think through or write out indemnification provisions to address these issues, it can lead to costly and dangerous unintended consequences. Companies need to think through exactly what they mean when they seek indemnification from a contracting party and ensure their approach to indemnification issues comports with their approach to their insurance coverage.